Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 20)
1
What is the main purpose of the Statement of Cash Flows?
Answer
(B)
To summarize cash inflows and outflows.
2
Which of the following are key features of a club?
Answer
(B)
Providing services to members.
3
What are some disadvantages of a partnership?
Answer
A
B
4
Which of the following is NOT a common characteristic of small businesses that often rely on incomplete records?
Answer
(B)
The owner's focus on detailed accounting practices.
5
What does 'accounts payable' represent?
Answer
(A)
Amounts owed to suppliers.
6
What does 'net realizable value' represent in the context of accounts receivable?
Answer
(B)
The estimated amount of accounts receivable that will be collected.
7
Which of the following is an example of a direct labor cost?
Answer
(C)
Wages of assembly line workers
8
What does a manufacturing business need to account for to determine the cost of production?
Answer
(C)
Direct and indirect costs
9
If a partner leaves, what can happen to the partnership?
Answer
(C)
The agreement can be terminated.
10
What is the main role of selling and administrative expenses?
Answer
(D)
Both to sell a product and manage the general expenses.
11
Which of the following is a characteristic of a general partnership?
Answer
(C)
Partners have unlimited liability.
12
What is the purpose of the provision for doubtful debts?
Answer
(B)
To estimate the amount of accounts receivable that will not be collected.
13
What is accrued expense?
Answer
(B)
An expense that has been incurred but not yet paid.
14
What accounting equation is the foundation of the balance sheet?
Answer
(C)
Assets = Liabilities + Equity
15
Which of the following is a liability?
Answer
(D)
Accounts Payable
16
When a partnership is liquidated, which of the following statements is true?
Answer
(A)
All partnership assets are sold, and liabilities are paid.
17
What is 'net profit' or 'net loss' calculated?
Answer
(C)
Revenue - Expenses
18
What financial statement would best help a partnership determine its ability to meet its obligations over the next year?
Answer
(C)
Balance Sheet.
19
What type of account is 'Accounts Receivable'?
Answer
(A)
An asset
20
Why is a partnership a legal agreement?
Answer
(C)
To create rules to settle possible disagreements.
21
What is a current asset?
Answer
(C)
Inventory.
22
Which of the following is a liability?
Answer
(D)
Accounts Payable
23
Which of the following is *not* a key purpose of the income and expenditure account for a club?
Answer
(C)
To calculate the value of assets.
24
Which principle is involved in determining the annual depreciation expense?
Answer
(C)
Matching principle
25
What are examples of direct materials?
Answer
A
B
26
What impact does recording depreciation expense have on a company's total assets?
Answer
(B)
Decreases total assets.
27
What type of accounting records do clubs usually maintain?
Answer
(B)
Simplified accounting records focused on cash flow and membership.
28
What is the primary purpose of a manufacturing account?
Answer
(D)
To calculate the cost of production
29
What is the effect of a bank overdraft on the financial position of a club?
Answer
(C)
An increase in liabilities
30
What does 'Subscriptions owing' or 'Subscriptions in arrears' represent?
Answer
(A)
Income earned but not yet received
31
What financial statement is used to assess a partnership's profitability over a period?
Answer
(C)
Income Statement.
32
Which of the following is a key characteristic of a sole trader?
Answer
(A)
Unlimited liability
33
What does 'accounts payable' represent?
Answer
(A)
Money owed by the business to its suppliers.
34
Which of the following is an example of an indirect cost in manufacturing?
Answer
(C)
Factory rent
35
What is the main purpose of the income statement?
Answer
(C)
To report the financial performance over a period.
36
If a club purchases equipment, where is this recorded?
Answer
(D)
Receipts and Payments Account and Statement of Financial Position
37
What type of items should be included in a credit side of total trade payables account?
Answer
A
B
C
38
In a manufacturing setting, what is the purpose of tracking and allocating overhead costs?
Answer
(B)
To calculate the total cost of production accurately.
39
What are examples of overhead costs?
Answer
A
B
D
40
What would be recorded in the receipts and payments account?
Answer
A
B
41
Which of the following is included in the calculation of prime cost?
Answer
(B)
Direct Materials + Direct Labor
42
Which financial statement is used to report changes in partners' capital accounts over a period?
Answer
(C)
Statement of Changes in Partners' Equity.
43
What financial statement provides a view of a company's financial performance over a period?
Answer
(B)
Income Statement
44
What is a characteristic of preference shares?
Answer
(C)
Preference shares have a fixed dividend.
45
Which of the following is a characteristic of a service business?
Answer
(B)
Provides services.
46
A club has a surplus of $5,000. The club's accumulated fund at the start of the year was $50,000, and there were no further transactions for the year. What is the accumulated fund balance at the end of the year?
Answer
(C)
$55,000
47
What are the typical components of owner's equity for a sole trader?
Answer
(B)
Capital contributions, drawings, and net profit/loss.
48
In a partnership, who is responsible for the debts of the business?
Answer
(B)
General partners
49
If the mark-up is 50%, and cost of sales is $160,000, how do we arrive at the revenue?
